Statoil: Without a change of course everyone will lose, including O&G industry
Norway’s Statoil has launched today its Energy Perspectives 2015 report that outlines a possible way to meet the 2-degree target. According to Statoil’s report, it is possible to hold the increase in global average temperature below two degrees, but with major changes.
“It can be done, but it will require a lot from many people,” says Statoil’s chief economist Eirik Wærness.
To remind, Statoil recently committed to end the practice of routine gas flaring at oil production sites by 2030.
In addition, Statoil is one of the six European oil and gas majors that recently called world governments and the United Nations Framework Convention on Climate Change (UNFCCC) to introduce carbon pricing systems.
Energy Perspectives 2015
The report has been prepared by a team of Statoil analysts in the fields of economic affairs, energy markets and climate, led by Statoil’s chief economist Eirik Wærness.
It is based on models and frameworks that the company uses in connection with long-term analyses of the energy markets.
“Without a change of course, everyone will lose, including the oil and gas industry.”
Energy Perspectives provides an analytical description of various possible development projections for the world economy, international energy markets and energy-related greenhouse gas emissions. Statoil has published this report each year since 2011.
Eirik Wærness said: “The world population is growing, more people are joining the middle classes, and the need for energy is increasing. However, a continued parallel increase in CO2 emissions as a result of this prosperity is not sustainable in the long term. Without a change of course, everyone will lose, including the oil and gas industry.”
“The consequences of climate change will impact economic development and welfare for all, regardless of sector and geography. In this year’s analysis we have therefore revised down economic growth up to 2040 in the scenarios that do not meet the 2-degree target,” says Wærness.
“Our analysis stops in 2040, but the negative consequences of climate change in these kinds of scenarios may well become even stronger in the following decades,” he adds.
President and CEO Eldar Sætre points out that Statoil bases the company’s strategic commercial assessments on a number of different analyses.
“Statoil supports efforts to meet 2-degree target, and we believe that carbon efficiency will be an important competitive advantage in our industry. Energy Perspectives helps contribute to a comprehensive, analytical assessment of various possible development projections in core areas for the company,” says Sætre.
The uncertainty in the long-term projections is illustrated in three different scenarios. The analysis does not take a position on whether one scenario is more likely than the others. Instead three scenarios have been modelled, based on three different sets of assumptions.
“Our aim is to contribute to a knowledge-based dialogue that can increase our understanding of the driving forces within the economy, energy and climate. The report highlights how different instruments and choices can result in different developments,” says Eirik Wærness.
Reform is a scenario where the countries meet their self-imposed commitments and energy-policy ambitions that have been presented in the run-up to the climate summit in Paris in 2015, but where the changes are not sufficient to limit global greenhouse gas emissions and thereby meet the 2-degree target.
The scenario is based on a significant improvement in energy efficiency, where total energy consumption rises by an average of 0.9% per year, while the economy grows by 2.8% each year, which is slightly lower than for the last 20 years. This scenario shows a very slight increase in global coal consumption and strong growth in renewable energy.
Renewal describes a combination of major changes that are necessary to meet the 2-degree target. Significant and rapid changes in energy consumption will be required, especially within transport and electricity production.
The scenario describes a sustainable energy system in 2040 where global CO2 emissions have been reduced by 39% from 2012 and are still declining, through even greater improvements in energy efficiency and a strong increase in renewable energy, primarily at the expense of coal. The scenario also includes stronger growth in nuclear power and more carbon capture and storage than in the Reform scenario.
The demand for oil decreases moderately, while the proportion of gas increases slightly. The global gas demand increases by some 15%. The global oil demand drops slightly, to just under 80 million barrels per day, compared with the current global daily consumption of around 90 million barrels per day. Due to falling production in the current oil fields, there will be a need for 50–60 million barrels of new oil production to meet the demand.
Rivalry describes a world dominated by conflicts, power struggles and inability to resolve common challenges. This scenario outlines a more polarised, disorderly world and has the lowest global economic growth, the highest consumption of coal and the least growth in renewable energy. This scenario will not lead to attainment of the 2-degree target, despite the fact that energy consumption in 2040 is lower than in Reform.